Thursday, 21 May 2009
Property Services (Regulation) Bill 2009: Second Stage
I am very pleased to have the opportunity to introduce the Property Services (Regulation) Bill 2009 in this House and I look forward to our discussion. The Bill provides for a comprehensive and streamlined legislative framework for the regulation of auctioneers, letting agents and property management agents. It will replace the current court-based system for regulating auctioneers and house agents with an updated system for the regulation of all property services providers.
Under current legislation, the Auctioneers and House Agents Acts 1947 to 1973, licences are issued to auctioneers and house agents by the Revenue Commissioners on presentation of the required District Court certificate. The legislation is confined to auctioneers and house agents and does not extend to property management agents. The latter comprise a relatively new and expanding segment of the property services sector.
In so far as the legislation extends the licensing system to property management agents and extends statutory safeguards to the clients of such agents, mainly property management companies, the Bill constitutes an important element of the Government's strategy to address problems arising in respect of the management and governance of multi-unit developments. I can confirm that legislation to improve the management of such complexes and arrangements for the governance of property management companies will be published within the next few days.
The Bill seeks to give effect to the principal recommendations of the Auctioneering/Estate Agency Review Group which reported in 2005. At its heart is a proposal to establish a new statutory body, the property services regulatory authority, to control and supervise providers of property services and to improve standards in the provision of those services. The Bill also provides for improved consumer protection by establishing a system for investigating and adjudicating on complaints relating to the provision of property services in addition to a property services compensation fund to compensate those who suffer financial loss as a result of dishonesty by property services providers.
I turn now to the Bill's main provisions to give Senators an outline of its scope and an understanding of how the proposed system of regulation will work in practice. Time constraints prevent me from elaborating on every provision of the Bill but, in any event, doing so is not necessary as the Bill is accompanied by a very detailed explanatory memorandum.
Under the commencement provisions set out in section 1, it will be possible to introduce the Bill's provisions on a phased basis. Such a phased introduction will help to ensure a balanced workload for the authority.
Section 2 contains the important definitions that determine the scope of the Bill. I want to draw attention specifically to the definition of "property service" as the provision in the State of any of the following services: auction of property other than land; purchase or sale, by whatever means, of land; letting of land; and property management services. All auctioneers, letting agents and property management agents will, therefore, require a licence from the authority. This licensing requirement will apply both to the property services employer, for instance, an auctioneering company or partnership, and to individuals providing a property service in the course of employment or as an independent contractor.
If the property service is provided in the State, a licence will be required regardless of whether the property concerned is located in the State. Part 2 of the Bill contains special provisions dealing with the provision of such property services by licensed providers from other EU member states. A limited number of exemptions to the licensing requirements are set out in section 3. These include the purchase or sale of land by a solicitor on behalf of a client in the course of and ancillary to the provision of legal services and the auction of property other than land for charitable purposes.
Part 2 of the Bill contains many standard provisions relating to the structure and operations of the authority, including provisions regarding the appointment of members and staff, the conduct of meetings and the keeping and auditing of annual accounts. I draw specific attention to the main functions of the authority in section 10, which include the following: to operate a comprehensive licensing system covering auctioneers, letting agents and property management agents; to set and enforce standards for the granting of licences e.g. educational and training standards and levels of professional indemnity insurance, as well as standards to be observed in the provision of property services by licensees; to establish and administer a system of investigation and adjudication of complaints relating to the provision of property services; to promote increased consumer protection and public awareness of property services in general, and the cost to consumers, risks and benefits associated with the provision of such services; and to establish, maintain and administer the property services compensation fund. This part also contains provisions on the charging of fees; it provides that the annual fees charged by the authority should be sufficient to meet the costs of administration of the Act. This is in line with the recommendation of the review group that the new regulatory structure should be funded through fee income generated by the authority for licences and other services.
Provisions in section 18 enable the authority to prepare and publish, or approve of, codes of practice which can be given statutory effect. While breach of any such code will not be an offence, the authority may have regard to the content of the code in any proceedings to determine whether improper conduct by a licensee has taken place.
Part 3, comprising sections 28 to 42, sets out details of the licensing system which will apply in future. Under section 28, it will be an offence for a person to provide a property service without the appropriate licence unless he or she falls within one of the limited exemptions in section 3. If a licensee provides a property service other than a service for which they hold a licence, or presents himself or herself as available to provide a property service other than the service in respect of which he or she has a licence, it will constitute improper conduct and an appropriate sanction may be imposed.
In order to provide ready access to the list of licensees, section 29 requires the authority to establish and maintain a register of licensees which will be available to the public. This will enable users or prospective users of property services to confirm that a provider is registered to provide the service concerned.
Sections 30 to 34 contain details of the licensing system. Each application for a licence from an eligible person must be accompanied by references as to the applicant's character and competence, including details of education, training and experience, a certificate by an accountant that proper financial systems and controls are or will be in place for the protection of client moneys, evidence of availability to the applicant of the necessary level of professional indemnity insurance and the appropriate fee. Applicants other than employees will also be required to furnish an up-to-date tax clearance certificate. Moreover, the legislation also permits the authority, if it considers it necessary in any particular case, to require the applicant to furnish additional information. When deciding whether to issue a licence, the authority will take into account the information provided by the applicant and, where appropriate, any information provided by the Garda Síochána under section 42. It will not issue a licence unless it is satisfied that the applicant is a fit and proper person to provide the property service concerned and complies with the other statutory requirements. A successful applicant must pay the appropriate contribution to the compensation fund before the licence will be issued by the authority.
In the case of companies and partners in a partnership, these requirements will apply to principal officers of the company or partnership. Principal officers are defined in the Bill as directors and partners as well as any manager, secretary or other similar officer of the company or partnership or anyone purporting to act in that capacity. As the principal officers of a company or partnership may change over time, it will be a condition of a licence issued to a company or partnership that the licensee takes all reasonable steps to ensure that the principal officers of the company or partnership are fit and proper persons to hold the positions in the company or partnership.
Before refusing to issue a licence in any case, the authority must notify the applicant of its intention to do so and its reasons for so doing and give the applicant an opportunity to make representations. It will be possible to appeal any decision of the authority in refusing to issue a licence to the property services appeal board which is being set up under section 72 and Schedule 5.
Arrangements applicable to the renewal of licences are set out in sections 35 and 36. A licence will be renewed provided the application is in the specified form; is made at least six weeks before the expiry of the existing licence; is accompanied by the appropriate fee and contribution to the compensation fund; and is accompanied by an accountant's certificate that proper financial systems and controls remain in place and evidence that appropriate professional indemnity insurance is in place.
Part 3 also includes provisions imposing obligations on licensees to have the licence in their possession and to produce it if requested to do, or to display it in their place of business, depending on whether the licensee is an individual or a company. It also requires licensees, other than licensees who are employees, to include their registration number in advertisements, on their stationery, in sales brochures and so on.
Section 40 provides that where a licensee is declared bankrupt, his or her licence will be suspended immediately and will remain suspended until it expires or the bankruptcy is discharged, whichever occurs first. Section 41 requires an applicant for a licence or a licensee to notify the authority of any material matter which would be likely to affect the validity of the licence.
Part 4 of the Bill, consisting of sections 43 and 44, requires a licensee to issue a letter of engagement to all clients. Once the letter has been signed by both the licensee and the client, it becomes a property services agreement. Details of the extensive information that must be included in such a property services agreement are set out in Schedule 2. A property services agreement must include details of the services to be provided by the licensee, the fees or commission payable by the client and the period during which the agreement has effect. The authority will specify the form of letter of engagement which all property services providers must use. Part 4 also imposes an obligation on licensees to keep records of all services they provide for a period of six years.
Part 5, sections 45 to 53, contains important provisions dealing with client accounts and related matters. It updates existing provisions in the Auctioneers and House Agents Acts 1947 to 1973 and extends them to property management agents. Section 45 empowers the authority to make regulations, including the kind of bank accounts which may be opened by licensees for the keeping of client moneys; the rights, duties and responsibilities of a licensee in respect of client moneys; the accounting records which must be maintained by a licensee; and client entitlements. Section 46 makes it an offence knowingly to lodge client moneys to an account other than a client account, or knowingly to make a false or misleading entry or record in accounting records.
This section provides for both summary and indictable offences. Where a licensee is convicted summarily, the court may order that any or all licences held by the licensee be revoked and that the licensee be prohibited, on a permanent or temporary basis, from applying for a licence or a particular type of licence. Where a licensee is convicted on indictment, the court is required to order that all licences held by the licensee be revoked and the person be permanently prohibited from applying for a licence.
Part 5 also contains provisions for the protection of client moneys and documents in the event that the authority refuses to renew a licence, a licence is suspended or revoked, or the licensee ceases to provide property services. It also makes provision for the protection of client moneys in the event of the bankruptcy or insolvency of a licensee.
Part 6, sections 54 to 60, deals with the sale and letting of land and includes new provisions requiring auctioneers and letting agents to provide statements of advised market value or advised letting value, as the case may be, to their clients within a seven-day period. The advised market value of land for sale must be reasonable and the authority may investigate cases in which values appear not to have been reasonable. This value can be a price range but the difference between the minimum and maximum value cannot exceed 10% of the lower value. The advised value can, however, be altered to take account of market conditions. Where land is being sold at auction, the vendor will be prohibited from bidding for it and from authorising or permitting another person to so on his or her behalf. Where land is being sold by private treaty, section 59 requires that licensees retain records of all offers received, including conditional acceptances. In order to avoid conflicts of interest, section 58 imposes an obligation on a licensee to obtain the prior written agreement of the vendor in any case in which he or she intends to provide a financial service to the purchaser or potential purchaser in respect of the land.
Section 60 empowers the authority to make regulations on matters concerning the sale or letting of land. This will include regulations concerning the contents of advertisements for the sale or letting of land, booking deposits, the terms of building contracts and similar issues.
One of the shortcomings of the present licensing system identified by the review group is that the only available sanction against misconduct is refusal to renew a licence. Part 7 addresses this deficiency by making provision for a comprehensive system for investigating complaints and imposing appropriate sanctions where such complaints are upheld.
Section 61 provides that any person can make a complaint to the authority and the authority must investigate the complaint provided it is made in good faith and is not frivolous or vexatious or likely to be resolved by mediation or other informal means between the parties. Section 62 provides that where the authority considers that immediate suspension of a licence is necessary to protect the clients or customers, or potential customers, of licensees, it may make an application on notice to the licensee to the High Court for an order to suspend the licence.
In exceptional circumstances where the authority considers that there is an immediate risk of financial harm to clients or potential users of a property services provider, the authority is empowered to apply to the High Court on an ex parte basis for an interim order to suspend the relevant licence. An interim order can last for a maximum of eight working days. To extend any such order, the authority must apply to the High Court on notice to the licensee for a new order.
Section 63 provides that an investigation may be carried out by the authority on foot of a complaint or on the authority's own initiative. It provides for the appointment of an inspector, or inspectors, to carry out such an investigation and to submit a report to the authority. Section 64 gives inspectors comprehensive powers to enable them to carry out investigations, including powers to enter and search premises, to carry out examinations and inquiries and to conduct an oral hearing. This section also provides that a person who obstructs or impedes an inspector is guilty of an offence.
Where a licensee is summarily convicted of an offence under this section, the court may order that any or all licences held by the licensee be revoked and that the licensee be prohibited, on a permanent or temporary basis, from applying for a licence or a particular type of licence. Where a licensee is convicted on indictment, the court is required to order that all licences be revoked and the person be permanently prohibited from applying for a licence.
Section 65 provides protection for persons, including employees of licensees, who make complaints to the authority. Section 66 sets out the actions to be taken by inspectors and the authority on completion of an investigation and includes provisions to ensure fair procedures are applied. On completion of an investigation, the inspector must submit a report to the authority. Before doing that, a draft of the report must be sent for comment to the licensee, and to the complainant if the investigation arose from a complaint.
After considering an investigation report, the authority may decide to request the inspector to carry out a further investigation, impose a major or minor sanction on the licensee if it is satisfied that improper conduct is occurring or has occurred, or dismiss the complaint and take no further action as appropriate. Before making its decision, the authority may conduct an oral hearing or invite the licensee and complainant, if the investigation arose from a complaint, to make submissions on the investigation report.
A "minor sanction" is defined in section 2 as a reprimand, warning, caution or advice, while a "major sanction" is defined as the suspension or revocation of a licence, payment of up to €50,000 into the compensation fund, payment of up to €50,000 towards the costs of the investigation or payment of a penalty of up to €250,000.
Factors to be taken into account in determining the sanction are set out in section 71 and include the need to ensure that any sanction is appropriate and proportionate to the improper conduct, the seriousness of the improper conduct, any gain made by the licensee as a result of the improper conduct and the amount of any loss suffered or costs incurred as a result of the improper conduct.
Sections 67 to 70 contain detailed provisions dealing with major sanctions. Section 67 provides that a decision by the authority to impose a major sanction will not take effect unless the decision is confirmed by the High Court. Section 68 provides that a licensee may appeal a decision of the authority imposing a major sanction to the High Court. Where the licensee does not appeal the decision, the authority must apply to the High Court under section 69 to have its decision confirmed. Section 70 makes provision for an appeal to the Supreme Court on a point of law.
In addition to a complaints and investigation procedure, an appeals system is also essential. Part 8 provides for the establishment of an independent property services appeal board to hear and determine appeals against specified decisions of the authority. The appeal board will have power to hear appeals against any decision of the authority refusing to issue a licence, declining to investigate a complaint, dismissing a complaint, imposing a minor sanction, refusing to make a grant or relating to the level of a grant out of the compensation fund. Matters relating to the composition of the appeal board and its operations, including the procedure for handling appeals, are set out in Schedule 5.
Part 8 also makes provision for related matters including provision for an appeal to the High Court on any question of law arising from a determination of the appeal board.
Part 9 - sections 75 and 76 - provides for the establishment, administration and maintenance of the property services compensation fund by the authority. The purpose of the fund is to compensate clients of licensees who suffer a financial loss as a result of dishonesty on the part of a licensee or an employee, partner or agent of a licensee in the course of the provision of a property service. Section 76 sets out rules on the payment of compensation out of the fund. Detailed provisions for the administration of the fund are set out in Schedule 6. This part and Schedule 6 are modelled on similar provisions in the Solicitors Acts.
Part 10 empowers the authority to draw up regulations for professional competence schemes for licensees and principal officers of licensees and related matters. Part 11 and Schedule 7 contain provisions governing the provision of property services in the State by persons who hold licences from comparable authorities in other member states. Rights of establishment and freedom to provide services are set out in the European Community treaty. These treaty rights have been elaborated in greater detail more recently in Directive 2006/123 on services in the Internal Market.
A person who has a licence from another member state to provide a particular property service has a right to provide that service here provided he or she is subject to requirements in relation to client accounts similar to those provided for in Part 5 of the Bill. To provide such a property service here, the person does not have to obtain a licence from, or to register with, the authority. Where such a person has his or her authorisation to provide a property service suspended or revoked by a competent authority in another member state, that person will be treated as a person who does not have a licence from the date of revocation or during the period of suspension, as the case may be.
A person who is permitted to provide a property service here on the basis of an authorisation from another member state will be subject to the complaints and investigation procedures, and to the new statutory requirements in relation to letters of engagement, client accounts, and the sale or letting of land.
Part 12, comprising sections 84 to 93, contains miscellaneous provisions. I already indicated that once the Bill comes into force in respect of any category of property service, the provision of that type of property service without a licence will be prohibited. To ensure this prohibition is enforced, the authority's powers of investigation extend to persons who are suspected of providing a property service or claiming to be available to provide such a service, without a licence. This power is set out in section 84 of the Bill. If the authority considers that a person, other than a licensee, is operating without a licence, it is required to report the matter to the Garda Síochána and the Minister. The authority can also seek a High Court injunction requiring the person to cease the activities concerned. In addition, the authority may initiate summary proceedings against the person concerned.
Section 89 deals with offences and it empowers the authority to bring and prosecute summary proceedings for offences under the Act. Sections 90 and 91 empower the authority and the Minister to make regulations implementing detailed provisions in the legislation. Finally, section 93 provides for transitional arrangements to facilitate the transition from the existing licensing system for auctioneers and house agents to the new licensing regime.
The Bill provides for an appropriate and comprehensive new system for regulating the property services sector. I am confident the provisions set out in this Bill will, when enacted, serve to enhance the standing and image of the sector, provide much improved consumer protection for the clients of property services providers and reassure the public that high standards will be applied and maintained.
Before concluding, I want to refer to the work which is already under way in advance of enactment of the Bill. An implementation group has been established and a chief executive designate has been appointed to advise on practical matters relating to the establishment of the new authority and to prepare for the new licensing system. The implementation group and the chief executive designate have been involved in drawing up the basic organisational structures, systems and procedures required by the new authority. In addition, a number of specific interim initiatives have been taken in advance of enactment of the legislation. For example, a code of practice for auctioneers and house agents has been put in place following consultation with representative bodies and other interested parties.
This code sets out certain minimum standards which must be adhered to in the provision of property services and it incorporates a complaints system which enables complaints concerning non-compliance with the code by those providers who have voluntarily signed up to it to be investigated. A database of licensed auctioneers and house agents has been compiled with the help of the Courts Service and the Revenue Commissioners. All licensees have been invited to subscribe to the code of practice and any licensee who agrees to comply with the code has had such compliance published in a public register. This register was first published in November 2007. Work is ongoing in the preparation of a code of practice for property management agents.
A consumer guide on property services, including the purchase and sale of houses and apartments, and the regulation of property services providers is nearing completion. A programme of education and training for the sector is being prepared in consultation with the industry and institutes of technology. This programme is designed to establish the minimum levels of education and training necessary for property services providers.
An interim website has been developed. Preparations are being made for the enhancement of the website to provide a wider range of consumer information as well as enabling some degree of on-line transaction. Work is ongoing on the development of a complaints handling and licensing database for the authority.
I take the opportunity to refer briefly to an issue which, while not directly related to the substance of the Bill, has been very much in the news of late and continues to generate controversy. I refer to upward-only rent reviews and the difficulties which rigid adherence to such reviews is causing for the retail sector in current economic circumstances. I am very conscious that the most acute difficulties are being faced by those who are parties to existing leases where the traditional arrangement which has evolved is that rent reviews take place every five years on an upward-only basis. These arrangements are not mandated by any legislative requirement. Rather, they represent well settled practice in this area and, as is often the case in such matters, it can be more difficult to effect change where practice rather than legislation is at issue.
I have written to key players in the commercial rental sector urging them to take a flexible and pragmatic approach to rent reviews arising in the context of existing contractual arrangements. I have also suggested that, regarding new leases, consideration be given to moving away from traditional practice in this area and that a more creative approach be taken to the drafting of rent review clauses. It is, perhaps, too soon to say if there is any appreciable shift in market practice in terms of recognising the new reality which prevails within the retail sector. The anecdotal evidence is somewhat mixed. However, it is clear that the new trading conditions which are evident within that sector require an innovative response on the part of all players. In that context, I again urge commercial landlords, in particular, to consider what part they can play in offering support to the retail sector bearing in mind that it is not in anyone's interest that vacancy rates increase to an unacceptable level because of a reluctance to offer sensible concessions to traders who are in difficulty.
I am aware that there have been repeated calls for legislative intervention in this area. I have not ruled out the possibility of such intervention but I would caution that the scope in this area may be limited having regard to constitutional and legal considerations. That said, I would welcome submissions which interested parties care to make on the issue of upward-only rent reviews so they can be taken into account in my Department's consideration of the policy issues which surround this matter.
I highly commend the Bill to the House. It is one part of a suite of legislation which the Government has been bringing forward in this area of property services and the issue, which will be dealt with in the multi-unit development Bill, that will be published in the next few days and that deals with the management of apartments and estates.
I welcome the Minister and I welcome the Bill. I thank the Minister for his detailed outline of what it contains. The memorandum is very detailed, which is a great help. This legislation arose from the 2004 auctioneering-estate agency review group and gives effect to the principal recommendations of that group. The proposal to move from the existing District Court based licensing system for auctioneers and agents to a new statutory authority is very welcome as we have been calling for it for a long time. While I do not speak as an auctioneer, I am one. Despite that, I hope I have an objective view of what is required and I agree with very much of what the Minister has told us.
I welcome the fact that we will have a separate Bill very quickly to deal with the management of multi-unit developments. That is very necessary because there have been many abuses and many of the residents of such places do not know where they stand. We support the objectives of this Bill. Throughout the recent property boom times the provision of property services such as auctioneering, sales, and maintenance have raised questions over the conduct of some service providers. We on this side of the House have consistently called for more regulation of this industry to better protect first-time and vulnerable buyers from unscrupulous practices. While there are many honourable people involved in property services, we have all heard of experiences of bad practices. Those who conduct their business in a transparent and honourable way have nothing to fear from this proposed legislation.
A persistent criticism is that it took so long for the legislation to be published. The Government provisionally set up the national property services regulatory authority in 2005 on a non-statutory basis. A director designate was appointed in July 2006 and it acquired full-time premises in Navan, a staff and annual budgets of hundreds of thousands of euro each year since then. However, the farcical situation existed whereby the authority could not operate because it had no legislative backing. That is being attended to and it is very welcome.
We see this Bill as a missed opportunity to include regulation on property management companies. After the recent boom there are approximately 500,000 people living in apartments and mixed developments in Ireland today. Associated with these developments are approximately 4,600 management companies. There continue to be many problems associated with this sector. Many home owners do not understand that they are shareholders in a management company, why this is necessary or that the management company of which they are a member and shareholder is not the same as the management agents who manage their block or estate.
Control of management companies is not being handed over to their owners. Developers in control of a management company may organise its AGM at a time and location where working residents would not be able to attend easily. In many cases, there are no sinking funds in place. Owners have no mechanism to seek redress when they are dissatisfied with service provision or the level of fees. There is no legal means of enforcing satisfactory completion of a development.
My party published its comprehensive policy on management companies last summer and we will seek to amend this Bill to reflect many of our policies. While we welcome the published legislation to regulate the property services sector, we take issue with the setting up of a new quango to do it. There is much room for quango consolidation. A national property services regulatory authority should incorporate the Private Residential Tenancies Board, PRTB, the proposed regulation of property services and regulation of property management companies. No doubt the Minister will give us his response and consideration of those when we reach Committee Stage.
It is good to note that the two institutes, the Institute of Professional Auctioneers and Valuers and the Irish Auctioneers and Valuers Institute, generally welcome the provisions of this Bill. However, there are some areas where people in the business feel it is overly prescriptive, especially in a market which is currently under such stress.
Section 2 refers to relevant price range. It states that land valued for sale or letting by a licensee means a price range where the difference between the upper limit of such valuation and the lower limit of such valuation is not more than 10% of such lower limit. I suggest this is too narrow and overly prescriptive given the volatility of prices, both during the boom and in the current recession. I suggest the 10% should be omitted and the section rephrased to reflect a valuer's reasonable judgment given prevailing market conditions. In fairness to the Minister, he said he provided a little for an out in regard to market conditions. In any event, we can tease that out on Committee Stage.
Section 75(4)(a) refers to the establishment of a compensation fund over a four year period reaching a minimum of €5 million and maintained by the authority. This could cause hardship and could be a severe financial burden on some practitioners if it is not thought out properly. I suggest €2 million should be the target figure as experience in both institutes has shown that no more than €150,000 has been paid out over 25 years to clients as a result of dishonesty by agents. It should be noted that even in the current very difficult market conditions, there have been no claims on the compensation fund to date. We can tease out those matters on Committee Stage.
The Bill takes care of the fact that many of the recommendations of the review group were considered but rejected because they could be counterproductive. Some of the recommendations put to the review group were off the wall, although maybe I should not say that, perhaps in one instance illegal, unenforceable or simply unworkable. Continuous professional development for members of the profession is very important as are the insurance requirements which I very much welcome.
It is conceivable that people in the Republic could establish a company in Northern Ireland for the purpose of avoiding the legislative provisions of the Bill. The EU services directive is likely to present a major problem for the property services regulatory authority in that a company established across the Border in Northern Ireland, where it would be subject to no licensing requirement and where the PSRA remit would not extend, could operate in the Republic in competition with those complying with the new legislation and paying the substantial additional costs involved in same.
Compliant agents in the Republic will look askance at the Oireachtas and the EU if this is allowed happen. Surely there are competitive issues at play here if, by doing what is suggested, people were able to save the cost of a licence; save the cost of professional indemnity insurance; save the cost of contributing to a compensation fund and offer no protection for client funds; do not have to achieve educational standards; do not have to undergo CPD; and may escape regulation totally if their base is in Northern Ireland. We will not countenance that. I hope we tease out some of these matters in more detail on Committee Stage.
My attention has been drawn to section 80 which suggests some comfort as regards the protection of clients' funds. We can leave that matter until Committee Stage.
Many people, who I am sure have been in touch with the Minister as they have been with us, and the Society of Chartered Surveyors have serious concerns. The society has a major concern about Part 6. It sees these provisions as seeking to turn established practice on its head without, in its view, a full awareness of the consequences in the property market which such fundamental changes will have. What is proposed in Part 6 is unprecedented to the point of being experimental. In the society's view, the measures proposed in Part 6 are not grounded upon a report from a commission or consensus of economic consultants with a particular expertise in the Irish property market or, indeed, any report.
Section 54 requires a valuer and every selling agent to somehow apply formidable foresight in determining, with unrealistic precision, the price for which a property will sell on the open market. The view of the society is that the current terms of section 54 are unreasonable and clearly unworkable in practice. It believes that the failure of the valuer to predict with absolute precision the price for which a property will sell on the open market will be punishable under Part 7 and will also expose valuers to liability from vendors and purchasers. Both auctioneering institutes are concerned about that.
Section 2 defines "advised market value". A document known as the red book prescribes standards under which chartered surveyors operate. The red book is now recognised practice internationally and is acknowledged by the international stock exchange for the listing of companies, the international banking community and the international accounting standards board. The red book provides a widely recognised and utilised definition of the term "market value". Uniquely, as a result of this Bill, Irish law will be at variance with international practice as to what constitutes market value. It is significant that the highest international standards in this area do not purport to compel a chartered surveyor to somehow foresee with great precision the exact price a property will achieve upon a sale. The contrast between the internationally recognised best practice as provided for in the red book and the terms of section 54 are striking. The society is very anxious that is brought to the Minister's attention. I hope it has been in touch with him or his advisers.
Section 54 fails to recognise the task of valuing a property as not an exact science determined through the application of fixed mathematical formulae. We referred to that previously when debating this matter and when seeking legislation.
Section 55 provides that an auctioneer-estate agent must not discuss or publish an estimate of the sale price which is below the advised value. The effect of this provision is to force a vendor to offer his or her property for sale at a price determined by a third party and not at a price or level of his or her own choosing. Obviously this is something against which we must guard. In any event, some professionals feel that freedom for the vendor to have the final say in the level at which his or her property is placed on the market is one of the core elements of a free market. This provision is completely at variance with a person's established right to market and sell his or her property at whatever level he or she wishes.
I look forward to Committee Stage. We will have a number of amendments and I look forward to the Minister's consideration and, perhaps, his acceptance of them.
Ba mhaith liom fáilte a chur roimh an Aire agus é ag teacht chun an Bhille tábhachtach seo a phlé. I welcome the Minister and also welcome the content of this Bill.
I shall respond to the Minister's speech, noting in particular his mention of rent reviews. Obviously, the retail trade will lobby to change the long-established practice within leasing of applying upper rent reviews only, a practice which, incidentally, also applies in other jurisdictions. At a time when the retail trade is going through severe difficulties it is understandable that rents should be a matter for serious consideration by such lobbyists as they struggle to remain viable. In addition, I am sure also this matter will engage the major retailers who are making enormous amounts of money in the retail trade in this country, even in the current climate. Most of them are from overseas and would, I am sure, employ lobbyists and suchlike to promote their interests by trying to get this changed.
The Minister's call is sensible. He is looking for flexibility and a more creative approach in this regard and also looks to landlords to play their part in the current economic climate. There are shopping centres not far from where I live where landlords have sought increases and, in some instances, have got them even in the current climate with the five-year rent review system in place. This beggars belief. I do not know how that was arrived at-----
-----but the consequence of their getting the increases has been that the units have been vacated. Of course that impinges on other businesses and on the viability of the centre.
People must act commercially. My reason for being very reluctant to legislate in this regard and for preferring that rent reviews can be either up or down would be that over the past 30 or 40 years only upper rent reviews have been applicable. In general, this has not been a major problem and has attracted a great deal of investment into the construction sector and property development. I know it is popular now to keep scrutiny on developers and their kind but if we are to attract inward investment into the property sector, particularly in a climate where any such investment is very mobile, we must insure we do not put ourselves in a very uncompetitive situation vis-À-vis property development investment.
The difficulties we are going through will work their way out, admittedly with much pain for the economy and society in general, but we will come through all this. Therefore, decisions we make must ensure there will be foundations for sensible economic growth in the future. I join the Minister in encouraging landlords and property owners to play their part in the current climate. It is in their interest as well as in the interest of the economy. However, it is possible to be over-prescriptive and we should be slow to respond to interests which might be exploiting the current downturn to their own advantage and, in consequence, perhaps creating significant difficulties for investment and investors in the future.
With regard to the Bill, it is my view that self-regulation does not work and we have seen many failures in this regard. In the legal profession, as much as in any other, self-regulation does not work. For a long time I looked for a move to a regulatory system of the legal profession, including of judges. The Ryan report was strongly debated in this Chamber today. A Senator alluded to the fact the Judiciary was not beyond culpability in some of the instances that occurred whereby youngsters were put into these institutions for very minor offences. One cannot blame the justices for what happened subsequently in those institutions but nobody should be above regulation.
I am disappointed with regard to this matter. I raised it before, having been in Canada with the Joint Committee on Justice, Equality, Defence and Women's Rights, and proposed to two of the Minister's predecessors that there should be an independent judicial council, comprising the profession's own peers, which would look at the conduct of judges. It reflected badly on these Houses and on our system that we had to set up a committee which found it extremely difficult to impeach and dismiss a judge in circumstances where that action would have been highly appropriate. Equally, I saw a situation in which a senior judge had to resign simply because there was not another procedure to deal with the issue, which was one that probably did not warrant his resignation. I appeal to the Minister that we move in that regard.
Concerning these issues, it is imperative that the people who are engaged to occupy such authorities have the commitment, capability and proficiency to discharge those functions adequately and satisfactorily. The Minister mentioned that the CEO of the property services regulatory authority has been designated already. What process was used to appoint that person? Was it done through an independent outside recruitment body? That should be part of what we are now inculcating into the public service system where there is to be open competition and where those who apply can be from either the public or the private sectors. There is enough anecdotal evidence that many of the bodies and regulatory authorities we have established have often been manned and managed by people from the public service. These people may have had some expertise in the area but had very limited experience with which to carry out the new regulatory function. We have seen serious failures in our regulatory system, certainly in the financial sector but also in others, and these continue. If the State feels it is desirable to establish a regulatory authority, there is an onus to ensure those we place in charge of such authorities are of the highest calibre and well equipped to function efficiently and effectively in that area. There should be no ring-fencing of the competition or of the engagement of personnel.
A personal hobby horse over many years has been the local appointments commission. This operates as an old boys' club. I know of an instance many years ago where a vacancy occurred at the most senior level in a local authority. As soon as the job was vacated it was possible for me to be told who the successor would be, long before competition commenced. That is unacceptable and should be changed and there is recognition at certain levels within the political and public systems that it should be changed. We should move to a situation where those involved in recruiting are experts in the field of recruitment and independent of any internal influences and favouritism.
It is essential the property services regulatory authority operates on a cost efficient basis. We hear a good deal about value for money these days within the public services. We have not been getting it and in many instances we are not getting it at present, with certain notable exceptions. People working in the public service should fully accept the idea of those on enormous salaries looking for demarcation to protect their own little empires is unsustainable and untenable, particularly in the current climate. There are excellent people in the public service, but we need to have a mix of public and private workers in these authorities. That would enhance the operations and ensure effectiveness and cost efficiency.
The property services regulatory authority will be funded by the industry itself. In the case of the Financial Regulator and ComReg, too, for example, one sees the authority getting its funds from the sector it is regulating. I believe that leads to a certain element of incestuousness within the structures. In this context, comment has been made in particular as regards the relationship between the Financial Regulator and the banks. Industry will seek to cultivate good relations with customers, regulators and others as part of doing business. However, it is important the effectiveness of the regulating body is not blunted as a consequence of the close personal relationships that may arise. I should prefer to see the State collecting the licences or the funding for all such regulatory authorities. The moneys could then be allocated, as appropriate, for the operations of particular bodies. Comment has been made, too, at Oireachtas committee level on occasion that because there is so much money sometimes flowing into these authorities, they do not see any necessity to be cost effective. That happens in all organisations, whether public or private. The more money that flows around, the more flaithiúlach people become as regards how it is spent. Therefore we need to be careful in that regard as well.
I expected the management companies attached to apartment and multi-unit developments would have been addressed in the Bill, but I understand and accept this area is to be dealt with separately and there will be legislation in that regard, which is essential. We should examine the multiplicity of authorities with very high levels of salary being paid. It might be interesting to know, for example, what is being paid to the chief executive-designate, from what position he has come and what his salary was there. I have analysed some of the payments made in the various authorities and there has been a tendency to equate some to those of the Secretaries General of Departments, the top tier of management. I do not believe that is necessary or essential. Often these regulatory authorities are essentially functions that can be performed by good administrators who possess the knowledge and work ethic to ensure performance is up to standard. It will be interesting to see how things shape up as regards this authority.
Mortgage brokers, too, might well have been considered under this legislation. To some extent they are governed by the Financial Regulator but I am very conscious of the failures and deficiencies in that area. It is a vital component of the whole structure as regards people buying property as well as the notion of protecting consumers in that regard, and this should be given some consideration. In some instances where the auctioneer is a mortgage broker for the purchaser he or she must get the agreement of the vendor in that regard, and that is a good provision. However, we might need to go further than that.
Overall, the Bill is to be welcomed. The Minister of State has gone through its various aspects very clearly and indicated how the licensing system might operate. It is imperative, as regards training and the maintenance of professional standards that there are proper and effective courses, and these are easily accessible. We will need people in these businesses and it is important the education and training facilities are readily available.
I have a background in the haulage industry and when similar professional competencies were introduced in that area, one saw the necessity for people to have qualified personnel. However, people with experience of running such businesses over many years may well have far more enhanced expertise than those qualifying in various courses and this is something that might be considered. The letter of engagement is important. As regards penalties I welcome very much Part 6 of the Bill, which deals with the maintenance of records. It should be illegal for somebody to have a phantom at the auction pushing the price up and there should be very severe penalties. The penalties for both the vendor and the auctioneer should not be less than the amount excessively extracted from the purchaser.
I do not have time to go into the Bill in further detail, but obviously we will do this on Committee Stage.
With the permission of the House, I should like to share time with Senator Ross who has a particular interest in this matter.
I had not intended to speak on this Bill, but rather to leave it to my betters to deal with, people such as Senators O'Toole and Ross who have a long track record in pursuing this issue. However, I was briefed this morning, which was pretty late, by people representing the Institute of Chartered Surveyors and I wanted to put some matters before the Minister for State. I am not necessarily agreeing with them. In fact I do not agree as regards some issues, but I should like to get the viewpoint of the Minister of State.
They are querying whether a distinction should not be made between residential and commercial property as they believe this distinction is not made clear in the Bill. They wonder why in section 2, which deals with "advised market value" the Bill purports to give a new definition of this and in their opinion ignores a document known as the Red Book, which apparently is accepted internationally, on the Stock Exchange and so on. It gives an internationally accepted definition of the term, "market value". I am interested in finding out the reason the Minister of State chose to ignore what is, I am told, presumably on reliable grounds, an internationally accepted definition.
They argue that assessing the value of property is not and cannot be an exact science. There has to be a margin of error. I believe the Minister of State recognises that, but again I am very interested to hear his response. The final point relates to section 55, the idea that the vendor should be required to sell at the advised value, and I rather agree with them in that regard. I know what the Minister of State is getting at, namely, gazumping. That is effectively dealt with in other sections of the Bill. At an auction, the value of a property is the limit to which two people are prepared to bid. This measure may erode the market. That is a question mark and there may be a reason for it.
Section 56 refers to the advised market value. We see the phrase advised market value, AMV, in the newspapers every day. These are often patently absurdly low. They are cited as a fishing expedition to get people involved. They gull people and their use is not good practice. I am on the side of the Minister in this instance.
Section 57 makes it illegal for a vendor to authorise a person to make false bids at an auction in order to inflate the bidding. We all know this goes on. It is not fair. It acts against the interest of the purchaser. It is not enough to say caveat emptor. There is responsibility on the part of an auctioneer to act in the interest of the purchaser. I approve of that and it is a pity if chartered surveyors do not agree with it.
Section 58 prohibits a licensee from providing a financial service. This would be a conflict of interest. One cannot be a servant of two masters. I completely agree with this measure.
Of course, a record of all offers must be kept. Otherwise, how is the vendor to know he or she is being properly treated. With regard to complaints investigations and sanctions, the authority must make sure a complaint is made in good faith.
I regret the Minister has not tackled property management companies for, for example, blocks of flats. I know of a number of cases where this is unscrupulously done. All the conflicts of interest adumbrated in the Bill reside in that group. Because developers do not have to vest a management company in the residents until an entire development is sold, they deliberately hold on to one flat. They then secure the services of their own families or friends at exorbitant rents and soak the unfortunate tenants for the cost. That has to be stopped.
The Bill is very interesting. The Minister of State has done good work. However, I have some questions about it and I ask him to come back with the regulation of property management companies.
I thank Senator Norris for sharing time.
This Bill is the culmination of much work done over a period of time and in that sense, it is welcome. Five or six years ago, Senator O'Toole and I pointed out the chaos that existed in the auctioneering world. This was not remedied by the fact that auctioneers and estate agents had their own regulating bodies. I know of the IAVI and the IPAV and there may be others. They added nothing apart from a fig leaf of protection for auctioneers. The situation was better when there was no regulation whatsoever because the IAVI and IPAV gave a semblance of respectability to auctioneers and created the impression that they were being regulated by bodies which allowed them to go into the auctioneering jungle and do what they liked. They were clubs. They did virtually nothing to discipline their members and allowed them to run riot.
What was worse was that anyone over the age of 18, without a criminal record and able to get an insurance indemnity and put down £12,000, could go to the District Court and get an auctioneering licence. I know this because I did it. I never practised but I got a licence because I could not believe it was so easy. I took a bank draft for £12,000 to the District Court in Bray, a garda came to my house to check that I was alive and in good health and spoke to me for a few minutes, and a judge accepted my application and wished me well in my new career. It is a career which I have not yet pursued but I intend renewing the licence in case things do not go quite as I anticipate in this House in the next few years. That is an indication of the ease with which anyone could practise as an auctioneer. That went on for years uncorrected. It has taken six years, an auctioneering group, committees, bodies and promises from the former Minister, Mr. Michael McDowell, for the Bill to reach this stage. Limited as it is, the Bill is welcome.
I have worries about why the Bill took so long and about certain things it does not contain. We must not underestimate the auctioneering lobby, which is very powerful in these Houses. When I counted in the last Seanad, the number of Members with auctioneering licences was in double figures. No other industry, profession or vocation could claim so many Members of the Oireachtas among its membership. There are huge numbers of auctioneers in the Dáil and on county councils. The political clout of auctioneers and estate agents, who are without qualifications, is formidable. I presume they still do not require qualifications because none is specified in the Bill.
People who could neither read nor write could become auctioneers. This meant they could go off into the property jungle, find a few victims and value, sell or buy their houses with no expertise whatsoever. It also meant they could handle money. One of the most iniquitous practices of estate agents is the taking of booking deposits. A purchaser of a house may give an estate agent a booking deposit of, perhaps, 10% of the purchase price. The estate agent then places this money in a client account. The money is being handled by a person without any qualifications to handle money, or anything else. A booking deposit has no legal standing whatsoever. It entitles the purchaser to nothing. When an auctioneer receives a booking deposit he normally takes the property off the market and puts up a "Sale Agreed" sign. However, if anyone else makes a bid an unscrupulous auctioneer, which a large number of them are, can sell the property to that person and simply hand back the booking deposit. A deposit given at an auction when an agreement is signed is completely different. A booking deposit paid on a private house sale has absolutely no legal standing. If an auctioneer is honourable he will not sell a booked property to anyone else, but he can, and they do. Gazumping often happens in those cases.
It is vital the new authority, which the Bill will establish, sets very high standards, particularly of education and expertise. If people like me, who have not a clue what the value of a house is, are allowed to get auctioneering licences, there will still be unscrupulous and inexpert people in this market. The Bill will have got us nowhere. It simply gives the regulatory body the power to change. We are putting a huge amount of faith in the regulatory body. Furthermore, while I do not cast aspersions on any Minister in this regard, we are making a great leap of faith that the Minister will appoint the right people to this authority. For God's sake, the Minister should not appoint people from the industry because they all have vested interests. The auctioneering industry has been a complete and utter disgrace in its self-regulation. It has been a case of cowboys regulating cowboys. The discipline imposed upon auctioneers and estate agents by these bodies is laughable. Everyone knows the abuses which took place in this business in good times and bad.
Senator Norris referred to the advent of AMV, advised market value, which has been a slight change for the better but it was preceded by guide prices which were the most misleading prices possible. They were deliberately pitched low to get people into the auction room. They were deliberately pitched at a level such that the suckers would come in and call on their solicitors and surveyors to attend and pay them significant sums to show up at the auction and carry out a survey of the house respectively. However, such people would arrive at an auction only to find out that the guide price was considerably below the reserve price. It was an utterly unscrupulous piece of salesmanship, targeted at gullible people and approved of by the IAVI and the IPAV, the two auctioneering regulatory bodies. There is a great onus on the proposed authority to clean up the auctioneering stable and clean up this rotten system which has existed and been approved by the bodies which have affected to protect the consumer. Such bodies have simply and solely existed to protect the auctioneers when they got into trouble, which happened from time to time.
Let us consider an example of such trouble. In February 2007, shortly after things turned in the housing market and the boom was over - forgive me if I do not have the correct date - there was an incident in which sale prices appeared in the newspapers provided by auctioneers who were members of these regulatory bodies. Instead of providing guide prices which were too low for the purposes of a rising market, the prices of sales negotiated behind closed doors, rather than at auction, were the wrong prices. They were too high. This is all documented. The newspapers published prices which were higher than the actual sale price. The auctioneers were caught out by The Irish Times and they said the practice would stop.
The National Consumer Agency got wind of this, called in the auctioneers and demanded that the practice stop. It was the most outrageously dishonest attempt to mislead the market and to give the impression that the market was not falling as fast as it actually was. Then, instead of any prosecutions following, the National Consumer Agency got an assurance from the auctioneering bodies that such practices would not recur. How in the name of God did this occur? Is there any other sector in which no prosecutions would be taken but those involved would simply be rapped across the knuckles for misleading the public on such an important issue? I simply do not understand it. The clout these people have and the amount they have been allowed to get away with has been scandalous.
I hope the Minister will make serious appointments to the body. He should not appoint auctioneers who have proven to be flawed for decades in their judgments and self-regulation. He should not appoint party political people or country councillors with auction licences, but people who have independent consumer interests at heart. It is very important the Minister does so because if this body is to be serious and to have the credibility that the IAVI and the IPAV never had, it must have independent people putting into practice the measures we have discussed. These include measures on discipline, education and conduct in the auction room such that no fake bids are allowed, and that no mortgage brokers are allowed to be part of an auctioneering business where there is the conflict of interest to which other speakers, especially Senator Norris, referred. I call on the Minister to send the body forward from here with the instruction it will be watched very carefully, that it must not be politicised and that it must act in the interests of consumers and the buyers and sellers of houses.
The Property Services (Regulation) Bill follows the establishment in 2004 of the Auctioneering/Estate Agency Review Group. It is hoped the five-year gestation period means that suitable consideration has been given to the contents of the Bill which contain much detail on its intent. It is especially apt that we are considering a Bill of this nature at this stage of the economic cycle and the political history of the country. It deals with the area of property which has cast a sizeable cloud over where the country stands economically and the area of regulation which, for the past decade, has been studiously avoided in many of our systems of administration.
There should be a welcome for the idea that the area of property services needs regulation, as do many other areas of administrative activity in the country. The failures in this area have already been outlined in the contributions of other speakers. There is a difficulty in ensuring effective controls in the purchase of a property and with the practice of gazumping. I welcome the establishment of a regulatory authority and the institution of a licensing system. There has already been a reaction to the proposed measures from those who would have preferred to continue to operate in a more free, unfettered system. The abuses which occurred in the past brought the Bill into being of necessity. The proposed regulatory authority should play an effective role because the legislation has been considered in this House and the other House. Countering the practice of gazumping should be helped by the proposals for the licensing system, but the proposals could be subject to further review.
I have a preference for the system which operates in Scotland, that is, the closed bid system. Under that system once an agreement has been made to sell a property and several vendors have entered an interest in purchasing it, a third party receives sealed bids and a gazump price cannot be achieved. I am unsure whether that should be considered at this stage of the legislation, but perhaps it could be considered following an examination of the operation by the regulatory body in its first years of existence.
The Bill is part of the Government's ongoing plan to introduce safeguards in the management of multi-unit developments. I express a part interest in this regard because my time spent in Dublin on Oireachtas duty has resulted in my living in one such multi-unit development. The way in which it is managed and how the associated fees are charged for leaves me as a tenant in some confusion and the case is similar for thousands of others in the country. The Bill is especially welcome on these grounds. There is a need to itemise and cost the services provided and to justify those costs. If the Legislature passes the Bill it will have responded to a very real public need.
A side effect of the Celtic tiger boom was the production of a great amount of new property. It also saw a demographic change with people moving to apartment style accommodation from the traditional terraced and semi-detached two or three bedroom houses which had been the norm. We must introduce appropriate legislation as a result.
Senator Ross's points about the constitution and structure of the board are well made and I hold similar reservations. It is important to have such a regulatory authority, but questions arise about creating a new body when there are already questions about many existing State agencies and the role they play. For example, in establishing this new authority should we not consider the continued role or perhaps a merged role for the Private Residential Tenancies Board? Should we not ask questions about why that board is under the auspices of the Department of the Environment, Heritage and Local Government, while this is under the auspices of the Department of Justice, Equality and Law Reform? It seems to me that we are in danger again of having complementary functions in similar agencies, with different Departments having responsibility for them. This criticism has been ongoing about the lack of joined-up thinking. We must ask those questions in addressing this legislation so that we can achieve appropriate responses. If we do that, the gestation and beginning of life of this agency will be more effective.
Unlike Senator Ross, I believe that while the structure and constitution of the agency will be vital with regard to how effective it can be, the real meat as to its future success will be in the licensing system - what it is being licensed for and how it will be policed as an ongoing licensing practice. If it is an exercise in paperwork and administration, where the practices that exist now are, somehow, sanctioned by the existence of a piece of paper, that is not a valuable exercise. For people to have faith in the regulatory body and the licensing being introduced, this debate and Committee Stage debate must give succour to the idea that the body being established will deal with the real problems.
Another welcome element of the Bill is that not only does it deal with setting up a system where none has previously existed, but it acknowledges there has been widespread abuses in the area. It adds on as part of a new process the facility for an appeal system to question the conclusions reached by the new body, either in the establishment of the licences or in how they are being operated. This is a good principle and is in accord with the principles of natural justice. It allows everyone involved in the process, those involved in the management companies, property owners and those letting such properties, know there is a new means for them to tackle any grievances or deal with ongoing problems. Much of the current difficulties are a result of the fact that those letting the properties feel powerless and abused due to the lack of those systems. If this Bill allows this new system happen, this Legislature will have done a good day's work.
I welcome the introduction of the Bill and look forward to the remaining contributions on Second Stage. Given its size and complexity, I expect we will have detailed Committee and Report Stages. All Members will join in ensuring it is the best possible Bill to meet a long-standing need that has been let go for too long.
I welcome the Minister of State. I welcome this legislation. It is the start of the road towards proper regulation, not just of estate agents and auctioneers but also of management agents, and it begins to address issues relating to the management of private estates.
The Bill will put the property services regulatory authority on a statutory footing. This is the body that will license and supervise firms offering a property service. The authority will also set standards and develop codes of practice and administer the compensation fund for those who suffer through a dishonest licensee. I have been asking for such a body to be put on a statutory footing for some time. It is in the interest of consumers to do so and I am glad the legislation is eventually before us.
The need for the Bill has been mentioned not just by Members, but in studies and reviews carried out over the past number of years. In 2004, the Minister for Justice, Equality and Law Reform set up a review group to look at the auctioneering profession. It found that the current regulatory system was outdated, felt that property management agents should be required to hold a licence and recommended that there should be an appropriate system to control entry into the profession. The group recognised concerns about pricing - particularly misleading guide prices - gazumping and gazundering. It recommended that a compensation fund be set up.
There have been other reviews, particularly on the management of estate developments in multi-unit developments. These developments typically consist of new apartment blocks with communal areas, halls and lifts. Management of estates also includes the management of common green areas in more traditional housing estates such as estates made up of detached or semi-detached houses. These reviews were carried out by the Law Reform Commission and the National Consumer Agency.
Both of these bodies have produced comprehensive reports with recommendations on how the situation with regard to multi-unit developments can be improved. These reports recognise that quite often the management companies and agencies exert excessive control over the maintenance of the developments. They highlight the difficulties this can pose, including the charging of exorbitant management fees to homeowners and, in some places, the absence of a long-term maintenance strategy. The reports recommend changes to improve the situation, in particular, giving homeowners more rights and more control over their homes and the setting of management charges. The Bill goes some way towards addressing these concerns and is quite detailed.
I intend to concentrate on the issues of the licensing of agents, the pricing of dwellings by estate agents and the existence of management companies in developments. The Labour Party may put down a number of amendments on Committee Stage.
The proposal to license agents is welcome. The Bill will make it an offence to offer a property management service without first having a licence, with a penalty of one year in prison and-or a fine of €5,000. The severity of this punishment should deter anybody from setting up or trying to set up an illegal practice, which is good news for the consumer. I am a little disappointed by the fact that there appears to be little teeth given to enforcing the code of practice to which licensed estate agents and auctioneers must adhere.
The code of practice for property service providers has already been developed and it sets out minimum standards to be followed by auctioneers and estate agents. However I understand - I would like the Minister of State to confirm whether this is the case - that if auctioneers do not follow the code of practice, they will not be civilly or criminally liable. If that is the case, would the Minister be prepared to make the penalty stronger?
I am pleased to see that the Bill makes an attempt to deal with the issue of gazumping. We all know of stories, the veracity of which cannot be checked, whereby when a buyer puts in an offer, another potential purchaser appears and makes a higher bid. The difficulty is that people do not know whether this other bidder is a real purchaser or a phantom bidder put in by a rogue estate agent to increase the sale price. It is difficult to tell if this practice is widespread, but there is some evidence that it has happened in the past and enough concern about the issue for it to give us reason to worry. A gentleman who visited my office in Ashbourne some months ago was convinced that when he put a bid on a property, a phantom bidder was put in place by the agent. This led to him having to pay at least an extra €20,000 on the purchase price, which represented approximately 10% of the cost of the property.
I am glad the Bill will make this practice an offence. A prison sentence of a year seems appropriate, but I ask the Minister to reconsider the proposed fine of €5,000 because that is quite small in the context of the potential gain a rogue estate agent might make, which could be many times that and which, over a number of occasions, could amount to several hundred thousand euro. The proposed fine is on the low side and I am signalling now that I propose submitting an amendment in that regard. People who engage in the practice of gazumping are low-lifes and should be driven from the industry. The fine is only approximately the same price as a first-class ticket to New York and is not sufficient to deter people from this practice.
On the matter of how to find out where gazumping occurs and how to prevent it, the gentleman who visited me has worked out a methodology for preventing it from happening and I will ask him to send the Minister of State some details on that for his consideration.
On the issue of management companies and agents, I note the legislation deals specifically with management agents and I recognise that the issue of management companies will not be taken care of until another day. I look forward to debating that legislation when it is introduced. I know of many families who must pay excessive charges for the upkeep of their estates. I know of families in Ashbourne who have paid for the maintenance of their estates, but have found that common lifts are not being taken care of. Their management agents are complaining about a lack of funds. When I visited an estate in Dunboyne last week, I spoke to people who are confused about having to pay €1,000 a year to have the grass cut in the communal areas. These are real issues. People feel they are being ripped off in the absence of regulation of management companies and agencies. I am glad that the management companies Bill appears to be on its way. It has to be said that many management agencies and companies do a fantastic job, although a few bad eggs need to be tackled. I hope the legislation before the House will facilitate that. We need to ensure that management companies are controlled by the residents of estates. The terms "management company" and "residents association" should be interchangeable. They should become one and the same thing.
We need to regulate the maintenance of open areas in estates that have been taken in charge by local authorities. I understand that the local authority parks department maintains the common areas of estates in the Dublin City Council and Fingal County Council areas. As there is no parks department in other counties, including County Meath, residents associations and management agencies have to find the money to pay for external contractors to maintain the common areas. It could be argued that this is an additional form of taxation for residents living outside the Dublin and Fingal areas. We need to examine the issues of equality that arise in this regard. Last year, the Minister, Deputy Gormley, said he would consider the possibility of establishing parks departments in counties such as Meath. What is his current thinking in that regard?
I welcome this legislation. It increases the rights and protections enjoyed by consumers in their dealings with estate agents and auctioneers, which is good news. I look forward to debating the forthcoming legislation on management companies in this House in the near future.
I welcome this legislation, which sets new standards for the auctioneering and property sector. Everybody will agree that the Property Services (Regulation) Bill 2009 is long overdue. It provides for the replacement of the current system of regulating auctioneers and house agents with an updated system of regulation of all property service providers, including auctioneers, letting agents and property management agencies. It also provides for the establishment on a statutory basis of the new property services regulatory authority, which will control and supervise property services and ensure they are provided to improved standards.
The introduction of legislation of this nature will increase the confidence of those who use property services. Not only will service providers have to meet the standards that will be set out, but the consumers of these services will also be entitled to such standards. This is long overdue. The authority will investigate complaints relating to the provision of property services and adjudicate on them. A property services compensation fund will be established to compensate those who suffer financial loss as a result of dishonesty. We all know that sharp practices have been a feature of the property business for many years. I am being generous when I refer to certain activities as "sharp practices". This legislation will ensure that new standards apply to the benefit of consumers. That is vitally important.
The main function of the proposed property services authority will be to operate a comprehensive system of licensing of the providers of property services, including auctioneers, letting agents and property management agencies. The authority will enforce the standards outlined in this Bill. I have reservations about the establishment of new bodies like this one. We complain all the time about the proliferation of quangos. There are almost 1,000 of them in Ireland. Perhaps it would be more appropriate for the functions of the proposed property services authority to be given to the existing Private Residential Tenancies Board. We need to avoid duplication. I think my proposal for administering the system is worthy of consideration.
It is important to emphasise the need for action to be taken in respect of the open spaces beside multi-unit developments, such as apartment blocks. I appreciate that this legislation does not relate to such matters. A new Bill is to be introduced to regulate the sector in question. We are all aware of the type of abuse that is taking place. No regulations have been introduced to date. Every multi-unit complex has a different property management organisation with its own rules and regulations. There are no overall standards. It is important to take action in this regard as soon as possible. In some cases, people have to pay €3,000 or €4,000 per annum for property services in their estates. One might not have to pay that much each year for one's mortgage. If the Government decides to introduce a property tax, it will have to reflect on the position of those who are already paying property service charges. It would be almost impossible to impose a further charge on those living in multi-unit developments. I welcome the introduction of better standards, which are needed. I welcome the Bill and I thank the Minister of State for bringing it to the House. We will get another opportunity to deal with certain aspects of it.
I thank Senator Butler for sharing time. I welcome the Minister of State, Deputy Curran. I am glad the Property Services (Regulation) Bill 2009 has been published and brought to the House. I will make some brief points on it. At the outset, I would like to declare an interest. I am a licensed and practising auctioneer. I wholeheartedly welcome this long overdue attempt to regulate the property services market. In recent years, Senator Ross has consistently argued that such regulation is needed. As a relatively recent entrant to the market, I have observed the need for this legislation over the past few years. If nothing else, it will protect the many auctioneers who go about their business in an appropriate fashion. I accept that there have been many abuses and I am glad that this legislation includes a variety of measures to deal with that. I am sure many improvements to the Bill, which is to be welcomed in general, will be suggested on Committee Stage.
In recent months, I received an anonymous e-mail from someone who thought I would be happy to learn that a survey had found that the two least popular, or least trusted, professions in the world were politics and auctioneering, in that order. I am unlucky enough, or perhaps lucky enough, to be involved in both professions. Legislation of this nature is long overdue. It is needed to improve the industry, which has faced many difficulties in recent years. While it will be particularly helpful from the point of view of consumers, it will also assist the many auctioneers who go about their business in an appropriate, legal and honourable fashion.
The property services authority, which has been established on a non-statutory basis, has already issued a code of practice. I am glad to report that many auctioneers are already following that code. I look forward to seeing the authority make further improvements to the code so that the level of compliance of auctioneers can be further enhanced. The auctioneering profession needs to enhance the service it provides in a way that gives the public confidence. I reiterate that auctioneers want to go about their business and make a living while providing a service they can stand over. They want to be sure they are being true to the wishes of consumers. There are several issues to discuss when we get the opportunity to go through the Bill section by section. At a glance I noticed in section 2 the definition:
"relevant price range", in relation to land valued for sale or letting by a licensee, means a price range where the difference between the upper limit of such valuation and the lower limit of such valuation is not more than 10 per cent of such lower limit;
Any valuer would set out to achieve that and even much less than a 10% variance. In the current market, however, we might have to reconsider the 10% limit because it is not an exact science at any time and especially not at the moment. This will be one of the major difficulties for the National Asset Management Agency, NAMA, to get an accurate valuation. It may be a little too prescriptive given the volatility or non-existence of a property market.
I fully agree with, and support the establishment of, the compensation fund. The hope is to build it up to €5 million. I do not know whether that is necessary as €2 million or €3 million may suffice in the interim, to be reviewed every couple of years. There are other improvements we can make.
More than anything else, however, I hope this legislation will provide the appropriate safeguards to bring back a level of public confidence in the auctioneering profession which is an honourable one. There have been abuses and bad eggs and we need to root them out. This legislation represents a good start in that process. I wholeheartedly welcome it and look forward to making a few more recommendations on Committee Stage.
I take issue with Senator Walsh's statement in which he attacked the Judiciary. That was entirely inappropriate. Our Constitution sets out the separation of powers and it is incumbent on every Member of this House and the Lower House to respect that provision. Senator Walsh overstepped the mark when he attacked the Judiciary.
I appreciate that. It is easy to condemn an entire business and profession. There are rogues in every business and there should be legislation, sanctions and enforcement procedures to ensure they are held to account. That is the basis for the demand for this legislation to regulate the profession. If there is a failure in the system, it is a failure to provide the necessary legislative base to deal with these issues. There is no point throwing up our hands and saying it is easy to get an auctioneering licence without qualifications. If that is the case and the legislation is inadequate, this should have been dealt with. It is a failure of Government that it did not legislate to deal with issues and problems that arose from time to time.
The delay in this legislation is unfortunate. It is an anomaly that we have proceeded to establish the property services regulatory authority provisionally and appoint a chief executive when there is no legislation in place to enable that person to carry out his functions. This formula seems to apply also to the National Asset Management Agency, NAMA. It is important that legislation is put in place and the Houses of the Oireachtas are consulted and play their normal role in establishing legislation before Government policy is pursued and activated.
The 2004 report of the Auctioneering/Estate Agency Review Group rightly points out that "the current regulatory system set up by the Auctioneers and House Agents Act 1947 (as amended) is outdated, inappropriate and inadequate for the present day market in Ireland". This should have been amended a long time ago.
The schema set out in this legislation seems top heavy. Can we afford this type of legislation and regulation or is there a simpler formula? We are establishing a new body, the property services regulatory authority but there is already the Private Residential Tenancies Board. Do we need a completely new body to perform a straightforward function when there is legislation to impose requirements for professional qualifications, maintain standards and specify the offences and sanctions? Do we need the elaborate procedure of setting up a new authority and an independent appeals board when there is still reference to the courts? One cannot avoid the courts. There will be litigation. The structure may be top heavy, too elaborate and costly.
I will not go into the detailed provisions of the Bill because my colleague has already ventilated some of them. The Bill outlaws important issues concerning bidding at auctions which we all know from experience have existed. The chartered surveyors however have made points which seem to have some validity and require re-examination of the relevant articles in the Bill. We can reserve our right to put forward detailed amendments in this regard. The Bill's objective is valid. There needs to be detailed regulation of those who qualify for a licence in the profession and a system put in place to maintain standards whereby clear breaches of those standards are forcefully sanctioned and people are held to account. For that reason we welcome the Bill but will submit amendments on Committee Stage.
The Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, mentioned in introducing the Bill, although it is not part of the Bill, the difficulties for the retail sector of rigid adherence to upward only rent reviews. We have known about this problem for a considerable time but what is the Minister doing about it? He hints that he may consider legislative intervention. This is an example of the Government's tardiness in going about a job and dealing with issues as they arise. It should not put them on the long finger. The fact is there are difficulties in the property market affecting the retail sector, as we all know. Addressing this specific issue would not require elaborate legislation. While issues arise over existing contractual arrangements, it is urgent that the Minister act in this area. Simply to mention the issue and hint at possible legislative intervention without proposing solutions and acting on the matter is insufficient. It is important the Minister proposes some initiative in this area and outlines his prescription for dealing with the acute problem in the property market in the current economic climate. I will not at this stage propose specific amendments on the Bill and will confine my comments to the general observations I have made.
I welcome the Minister of State, Deputy Peter Power. I compliment the advisers in the Department on their very extensive and difficult work. Much work has gone into the Bill. It has been very slow coming and Senator Ross and I have been shouting for it for the past five or six years. The Cathaoirleach spoke on this issue on a number of occasions.
It is important to consider the genesis of the Bill. It has been produced at a time in which auctioneers probably have a worse reputation than trade unionists or politicians, which is pretty bad. I grew up in an area in which every family had what it described as its solicitor and undertaker. If a member of the family died, one knew which undertaker would be looking after the burial. Similarly, families had their own auctioneer. Those were the times in which auctioneers were part of and served the community. Unfortunately, these auctioneers were replaced by new business-minded auctioneers who were looking at the bottom line such that when one wanted to sell one's house they suggested a value well above the market value in order to grab the work. Then the issue of gazumping arose, in addition to all the other issues that reduced the tolerance for and trust in auctioneers and estate agents.
I recall one occasion on which I spoke about this in the House. When I finished speaking, two Fianna Fáil Senators on the Government side approached me. There are many auctioneers on that side of the House, as Senator Ross stated. The Senators who approached me shared my views and told me how they themselves had been treated appallingly in that some of the estates of relations had been bought by relatives of auctioneers and appeared to have been sold for less than the market value.
I very much welcome certain provisions in the Bill, some of which are really important. I appeal to the Minister and his advisors to be flexible. There are provisions that need to be tightened up and others that are superb. I have a background in regulation and governance and have been involved with a number of boards in this area. I can see what is very good in the Bill and can also recognise problems that need to be dealt with.
Section 63, on investigations, is the best I have seen. Having considered legislation on the Medical Council, the Irish Auditing and Accounting Supervisory Authority and the Teaching Council, I believe this section is comprehensive and clear. The legislation describes information as confidential. Rather than having the section deal with the general issue of confidentiality, it deals with information and refers to confidential information. This causes a considerable problem very often for boards. Many people believe every bit of information they receive is confidential if they receive it from a board. Section 63 focuses on this, which is important.
I have a query on the requirement in Schedule 3 that investigations be held at all times in private, or "otherwise than in public". This should be re-examined. Some discretion should be allowed to the inspector on occasions where the public good would clearly warrant it. Many people are asking what investigations are being conducted into the banks but the fact of the matter is that the groups carrying out investigations dare not say publicly they are doing so because they might be in breach of legislation. In some cases, the public good would be served by at least saying such investigations are taking place. The provisions in the Bill are very solid in this area.
The weakest area of the Bill concerns membership of the authority. I could easily track how the discussion on membership evolved. The first membership requirement is that one have "knowledge or experience". This is a very low bar. If it were "knowledge and experience", it would be better. Reference is made to "matters relevant to the functions of the Authority". These matters should be spelled out. Reference should be made to one's consumer background, education or qualifications and to one's background in governance or ethics. I am not proposing these requirements specifically but arguing we should not give a Minister unfettered discretion to appoint anybody he likes. Appointees should be invited before the appropriate committee of the Houses, but not the Supreme Court as in Washington, to explain why they will do a good job. It would not be a beauty contest or involve marking out of ten but would allow one to determine whether the nominees are okay.
I invite the Minister of State and others to consider the membership of the Teaching Council, the accountancy oversight body, the Medical Council and the various legal boards in this regard. The worst thing one could do with the new body is fill it with auctioneers; it would inspire no trust or confidence. I do not speak for auctioneers because I have been their constant critic but believe the second worst thing one could do is not appoint any auctioneers. The only way one can fulfil both criteria is by requiring that there be a certain percentage of auctioneers that should not exceed a specified level, be it 30%, 40% or 50%. That is crucial. I cannot accept the regulation of any profession if the regulators are not required to include some members of the profession. That can be done.
I accept Senator Regan's point that the work of another body could be done by the one proposed in this Bill to prevent the setting up of another. Regardless of which approach we take, I ask that there be some auctioneers or estate agents on the board. We must trust them in this regard. A board should have members with on-the-ground experience but who are not entitled to overwhelm it. This issue should be considered.
I have a question in which nobody other than me will be the slightest bit interested and to which I want a comprehensive answer. Section 12 states membership is not allowed in respect of Members of the Dáil, Seanad and European Parliament and members of local authorities. This inflames me. At a time when we are trying to defend our public image, I want to know why this is the case. This kind of provision arose at a time when many boards were answerable, in cash terms, to a House of the Oireachtas, for example. One could not be responsible to the House and be a Member thereof at the same time.
The Minister of State will not be allowed to answer my question but if he traces the history of the provision, he will find that nobody in the Department of Justice, Equality and Law Reform asked that it be included. That Department submitted the heads of the Bill and sent them to the draughtsman, after which a draft was returned. It was at this point the provision was included. I know this and could write the script on it. The provision should not be included unless there is an absolutely sound argument to the contrary. The membership provisions are vague and flawed. They may be deliberately vague but that is not acceptable. That day is gone now and I ask the advisers to talk sternly to the Minister about this. People should be there on their merit and know why they are there, just as if they were on the Medical Council, in which case they might be representing consumers, patients, or medical professionals.
Other provisions I strongly welcome are section 18, which refers to a code of practice, and section 10 which refers, among other things, to ethical standards. These are important. It is also important to underline the fact that they are not written into the Bill, which is as it should be. They should not be spelled out in the Bill as they will grow through experience and will be built upon over time by the authority. I am in favour of that.
I am appalled to find that old chestnut, in section 23(2), that the chief executive of the authority shall not question or express an opinion on the merits of any Government policy before a committee of the House. The authority is required to appear before a committee of the House, and if I ask the chief executive a question, he or she cannot give a view that includes an opinion or question about Government policy in the area. What kind of accountability is that? We are saying we will not allow TDs, Senators, councillors or MEPs to have anything to do with it, but when the members of the authority appear before us they cannot answer questions in any way that is critical. When did we get so sensitive in ourselves? Do we not take hassle every time we go in front of a camera or behind a microphone? Is it not part of our game plan to cope with such things? It is not good enough.
I am pleased with the section dealing with advised market value, which is important. This value is required under the section to be reasonable. I defended the word "reasonable" yesterday during our discussion of another Bill. I like the word because judges know what it means when they hear the context. With the way things are at the moment it is impossible to value a house. I asked ten or 20 people how this could be done. The business of valuing has changed. In any small town in Ireland, when I was a youngster, it was easy enough to put a value on a house. A bungalow is on a half-acre site, which in this area is worth X. The cost of the materials to build the bungalow is Y, and the cost of profit and wages in building the house is Z. Thus, the value is X plus Y plus Z, or at least that was the broad thrust of it. However, all that has gone out the window. For the last 20 years one's house was valued by the auctioneer's comparison with what the house next door or down the road sold for last year or will sell for next week. This section is important and I welcome it and commend the Department on bringing it in.
I do not know whether anyone has referred thus far to section 58 dealing with financial services. This is an important provision and the one that will hurt auctioneers and estate agents the most. Under this section, an auctioneer or estate agent who is selling me a property is not allowed to provide me with a financial service attaching to it, such as a loan, mortgage or insurance. I used to have a thick file on this whole business. In many cases a house was sold to the underbidder because - I knew this but could not prove it - the underbidder was given a mortgage or similar supports.
This is a good Bill which fills an important gap. It needs to be tightened up and I ask that the Minister be open to this. The Minister of State, Deputy Curran, will admit that when he was taking the Charities Bill 2007 it was strengthened immeasurably during the long debates we had in the House. We can do the same with this Bill. I am not approaching this - nor will anybody else - in a party political way. It is a question of making the legislation work. Senator Feeney, who is sitting opposite, served on a professional board in the past and she may share my view that we need to have some members of the profession on the regulatory body, while ensuring they do not overwhelm it, and that everyone else should be there to perform some function, perhaps because of an ex officio position.
I could go on at some length about the generality of the Bill but we will deal with aspects of it as we go along. I welcome the legislation and will support it in general. However, like Senator Regan, I express the hope that the Minister of State will be open to amendments as we go along.
There must be a telepathic connection between me and Senator O'Toole, because I was in my office packing my bag to go home when I realised I had never heard a man speak so much sense. I picked up my bag and ran to the Chamber to support him in his comments, particularly with regard to other professional bodies and how they are run, and how new legislation has changed the whole outlook of those bodies. First, however, I welcome the Minister of State, Deputy Curran. I am delighted to have a few minutes to speak on the Bill, which is long awaited but is excellent legislation. I am looking forward to every Stage as it goes through the House.
The reason I came here was that in a former life I sat on the Medical Council and on the nursing board, An Bord Altranais. Both of these, at the time I sat on them in 1998-99, were made up mainly of members of the profession. Lay representation on the nursing board was two out of 26, while on the Medical Council it was four out of 24. I am on record as saying in the House that where there is a dominance of professionals on a body, it is not run professionally or properly. As a lay person I have heard it said, and perhaps I have said it myself, that bodies are referred to as old boys' clubs and as being "sewn up" and that unions have a special position. However, new systems such as the one introduced for accountants by the Minister for Health and Children, Deputy Harney, when she was Minister for Enterprise, Trade and Employment, are excellent. Accountants whom I know have grasped the system and it is working effectively. They welcome it and are proud they were the first profession to come in under the new system.
I was on the Medical Council when the talk was that there was to be a new Medical Practitioners Act to replace the one that was almost 30 years old, and the doctors were worried that we were throwing the baby out with the bathwater. The lay majority must be retained. Senator O'Toole and I were on the same side when this was going through and there were not too many people in the medical profession who were happy with us because they were not in favour of it. However, it is now working effectively and the council has majority lay representation.
I came here to support the point made by Senator O'Toole when he said we must have members of the profession on the board. We need to have auctioneers and estate agents sitting on the board. When I was on these medical boards, I could not have worked on fitness to practise issues without the expertise of the doctors and nurses in showing me, the lay person, how practice should be conducted. This is the point Senator O'Toole was making. We must have professionals. There is no point in bringing in fabulous legislation such as this if we are to leave them out. I emphasise to the Minister that this must be considered. To me it is a must. We are blindfolded without professionals because no one knows better how their practice works. However, I would suggest we bring in other disciplines around them. The Medical Council is a good example of how this can be done. There are representatives of medical related disciplines who are not doctors, including nurses, pharmacists, chiropodists and dietitians. There are many people associated with the area of property, including those of Senator Regan's profession, which is the legal profession, as well as architects and others, who could join the board. Senator O'Toole's point was that we must have auctioneers on the board and I agree with that.
I look forward to Committee and Report Stages. I am sure the amendments will be fruitful. There is a great deal of interest in this Bill. We have all called for legislation in this area. The profession should not be afraid of the legislation. It should take encouragement from other professions that have been changed that are now satisfied with how their boards are run.
John Curran (Minister of State, Department of Community, Rural and Gaeltacht Affairs; Minister of State, Department of Education and Science; Minister of State with special responsibility for Integration and Community, Department of Justice, Equality and Law Reform; Dublin Mid West, Fianna Fail)
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I thank Senators for their contributions to the debate. It is clear the Government's objective of high standards in the provision and delivery of property services, which the proposals in the Bill are designed to achieve, are broadly shared on all sides of the House. I have listened for the last hour and a half to the contributions of Senators and they broadly support the Bill's objectives. Some detailed points were made that will be clarified on Committee Stage. It was encouraging, however, to hear the general welcome for the thrust of the Bill.
Senator Regan was critical of the delay in the Bill getting here. It is important to note that in parallel with this, an implementation group has been established so when the Bill is enacted, the process will move swiftly instead of things happening in isolation and on a step by step basis.
Part 2, Schedule 7 seeks to give effect to our obligations under the EC treaty and the services directive while ensuring that users of property services are adequately protected. Concerns have been raised that these provisions may be open to abuse. It is important to emphasise that a person from another member state will not be allowed to provide a property service here unless he has an appropriate licence or authorisation from another member state.
Among the most important provisions in the Bill are those in Part 5 on the protection of client moneys. A person who has a licence or authorisation from another EU member state will not be permitted to provide a property service on the basis of that licence or authorisation unless he is subject to the requirements for client accounts similar to those set out in Part 5 of the Bill. This provides an important protection for clients and users of property services provided by persons from other member states. All providers of property services, whether licensed by the authority or by a similar authority in another member state, will be subject to the complaints and investigations provisions set out in the Bill, as well as the provisions for letters of engagement and the sale and letting of land.
While the provisions for the property services compensation fund and professional indemnity insurance will not apply to such persons, they will be required to include information on those issues in the letter of engagement which they will be required to give to all clients. Clients will therefore be able to make an informed decision as to whether or not to engage such a person.
Senator Walsh asked about the chief executive designate. He was appointed following an open competition run by the Public Appointments Service. The salary scale attaching to the post is that of a principal officer, higher scale.
Senators have raised concerns about provisions in the Bill for the advised market value of land. These provisions give effect to a key recommendation of the auctioneering estate agency review group. The purpose of these provisions is to avoid a situation where unrealistically low prices are quoted for land, particularly houses and apartments, to attract potential purchasers for the property concerned in the hope of increasing the eventual price for the property. The Bill applies to auctioneers, not to surveyors.
Standards will mainly be set out in statutory regulations with sanctions and penalties applicable to breaches rather than to the codes of practice. Codes will be used for ethical standards, where prosecution would be more difficult. As far as possible, standards will be in accordance with regulations rather than codes.
The Minister is aware there have been repeated calls for legislative intervention in upward rent reviews. He has not ruled out such intervention but he cautions scope in this area may be limited having regard to constitutional and legal considerations. The Minister would welcome submissions that interested parties would care to make about the issue of upward only rent reviews so they can be taken into account in the Department's consideration of policy issues surrounding this matter.
Senators O'Toole and Feeney made some interesting points about the membership of the authority and I will convey those to the Minister. The involvement of local authority members has arisen before but the views expressed today will also be relayed.
I thank all those who contributed to the debate. The Minister will consider the points raised in the context of possible amendments on Committee Stage.